subsequently distribute the sale proceeds to its shareholders in complete liquidation Corporation may distribute its assets to its shareholders in complete liquidation Buyer may purchase the target’s stock and subsequently liquidate its new subsidiary to obtain subsidiary’s assets Shareholders and management may wish to discard the corp. form to avoid tax problems like doubt taxation or risk of incurring accumulated earnings tax or the personal holding company tax (special penalty taxes imposed
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Jollibee and its Strategic control over its subsidiaries International Business and Politics: 2012 Word count: 1583 Pages: 6 1. Introduction Anil K. Gupta and Vijay Govindarajan argue in their article‚ “Knowledge flows and the structure of control within multinational corporations”‚ that mainly all previous research on strategic control within multinational companies (MNCs) has paid attention to why these choose to go abroad. They instead argue that for successful offshore business
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emphasis on the role of foreign ownership. Using a worldwide establishment panel dataset‚ we investigate how multinational subsidiaries around the world responded to the crisis relative to local establishments. We find that‚ first‚ multinational subsidiaries fared on average better than local counterfactuals with similar economic characteristics. Second‚ among multinational subsidiaries‚ establishments sharing stronger vertical production and financial linkages with parents exhibited greater resilience
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foreign subsidiaries because each subsidiary must have adequate working capital to support its operations. If a subsidiary experiences a deficiency in inventory‚ its production may be delayed. If it is short of cash‚ it may be unable to purchase supplies or materials. If the parent of an MNC is aware of the working capital situation at every subsidiary‚ it may be able to transfer working capital from one subsidiary to another in order to solve temporary deficiencies at any subsidiary. Subsidiary Expenses:-
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strategy will influence the entry mode decision of the firm (MNC) and investigates whether acquisitions and Greenfield subsidiaries are being managed in the same or in a different way. Two types of international strategies for MNC’s 1) Global strategy: dominant strategic requirement: efficiency. As a result these firms integrate and rationalize their production. Subsidiaries act as ‘pipeline’ for headquarters and usually do not respond actively to local market demands. 2) Multidomestic strategy:
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acquisition of a subsidiary. Traditional / Proportionate method The traditional measurement of goodwill on the acquisition of a subsidiary is the excess of the fair value of the consideration given by the parent over the parent’s share of the fair value of the net assets acquired. This method can be referred to as the proportionate method. It determines only the goodwill that is attributable to the parent company. Accordingly the NCI share of the net assets of the subsidiary determines the NCI
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exchange loss account was $10‚000 on December 31‚ 2008‚ before any necessary year-end adjustment relating to the following: (1) Newsprint had a $15‚000 debit resulting from the restatement in dollars of the accounts of its wholly owned foreign subsidiary for the year ended December 31‚ 2008. (2) Newsprint had an account payable to an unrelated foreign supplier‚ payable in the supplier’s local currency unit (LCU) on January 15‚ 2009. The U.S. dollar–equivalent of the payable was $50‚000 on the December
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Anne-Wil Harzing EXECUTIVE SUMMARY One of the most complex challenges that multinational corporations (MNCs) face is harmonizing the opposing forces of standardization versus localization. Based on a large-scale survey of headquarters (HQs) and subsidiaries of American‚ Japanese and German MNCs‚ we provide evidence that MNCs can no longer afford to define standardization simply as the worldwide adoption of HQ practices. Standardization can take place towards two different poles: HQ practices and global
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Chapter 15 Multinational Restructuring Lecture Outline Background on Multinational Restructuring Trends in International Acquisitions Model for Valuing a Foreign Target Assessing Potential Acquisitions After the Asian Crisis Assessing Potential Acquisitions in Europe Factors that Affect the Expected Cash Flows of the Foreign Target Target-Specific Factors Country-Specific Factors Example of the Valuation Process International Screening Process Estimating the Target’s Value Changes
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Financial Environment Managing the MNC 1. Managers are expected to make decisions that will maximize the stock price * A U.S. view‚ not shared universally. 2. Focus of this text: MNCs whose parents fully own foreign subsidiaries (parent is sole owner of subsidiary.) 3. Finance decisions‚ as always‚ are influenced by other business discipline functions: * Marketing * Management * Accounting and information systems Agency Problems The conflict of goals between
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